Use our essay title generator to get ideas and recommendations instantly
Themido, I., A. Arantes, C. Fernandes & A.P. Guedes. (2000). Logistic costs case study: An
ABC approach. The Journal of the Operational esearch Society, 51 (10): 1148-1157
Stable UL: http://www.jstor.org/stable/253927
The use of Activity-Based Costing (ABC) reflects the fact that indirect costs and overhead costs are often more draining to modern organizations than direct costs.
The article specifically discusses the use of ABC in terms of its use in costing logistics services.
Traditional costing in logistics uses the direct product profit-ability (DPP) methodology which is "to identify all the costs associated with a product or an order as it moves through the distribution channel" (Themido et al. 2000: 1149).
ABC identifies activities "that are responsible for costs and therefore consume resources, provides a cost flow assignment chain which enables the activity costs to be continuously re-assigned or imputed to the products, customers, or services that use the activity" (Themido et…
Themido, I., A. Arantes, C. Fernandes & A.P. Guedes. (2000). Logistic costs case study: An
ABC approach. The Journal of the Operational Research Society, 51 (10): 1148-1157
Stable URL: http://www.jstor.org/stable/253927
An incorrect entry or inherent errors in the accounting procedures (for instance mistakes in contract cost allotment) can endanger the system. Organizations need to make sure that their employees are well versed with the latest cost accounting policies and have a backup plan for unfortunate mishaps. The presence of recruits who are unaware of the cost accounting process often destabilize the investments made on the accounting software (Tinsley, 2010).
Time is a crucial factor when it comes to cost accounting. The organization needs to function efficiently enough to face any government audits, even if conducted on short or no prior notice. Contractors need to be prepared and tackle any situation positively enough to receive affirmative evaluation results. Dealing with a company which associates itself with a recalcitrant accounting system wastes time. ecuperating from problems and reclaiming government approval is usually harder. It can result in premature expiration of contracts, dissipation…
n.a. (2011) What is Cost Accounting?. Retrieved from http://www.wisegeek.com/what-is-cost-accounting.htm
Tinsley, M.(2010) 6 critical accounting challenges for government contractors. Retrieved from http://washingtontechnology.com/articles/2010/06/16/federal-accounting-challenges.aspx
Huber, B.(2010,July 25) Accounting Guide for Construction. Retrieved from http://www.ehow.com/about_6772706_accounting-guide-construction-contractors.html
Responsibility of managers in managing projects and creating budgets
Managerial ethics is essential in managing projects and creating budgets. Ethical accounting ensures all financial information is reported to business owners, directors or managers. Managers who fail to report negative information or use a company's internal financial information for personal gain can create serious legal situations for businesses (Vitez, N.d.). Business owners and managers often require all information, whether good or bad, when reviewing business operations and making decisions. It is also important to create accurate budgets. There is often a temptation to tweak budgets to fulfill personal goals. For example, if you favored a particular project you may try to make it more appealing financially. However, it is necessary to be as objective as possible to ensure that you create budgets ethically.
Accountable for achieving financial performance targets
Managers are often under immense pressure to meet financial performance…
Fooshe, G. (N.d.). 10 Financial Principles that are Biblical. Retrieved from Back to the Bible: http://www.backtothebible.org/10-financial-principles-that-are-biblical.html
Senaratne, S. (2011, July/August). The role of ethics in accounting. Retrieved from CIMA: http://www.cimaglobal.com/Thought-leadership/Newsletters/Regional/The-CIMA-Edge-South-Asia-and-Middle-East/20111/July -- August-2011/The-role-of-ethics-in-accounting/
Vitez, O. (N.d.). About Ethics in Managerial Accounting. Retrieved from Small Business: http://smallbusiness.chron.com/ethics-managerial-accounting-3737.html
competing cost accounting approaches and explores best practices implemented in different countries. The essay examines traditional cost accounting (CA), activity-based costing (ABC), Grenzplankostenrechnung (GPK), throughput accounting (TA) and resource consumption accounting (CA).
Tradeoffs Between Cost Accounting Systems
Comparing traditional costs systems and ABC shows that there are tradeoffs between cost and usability. The traditional cost system is typically both easy and inexpensive to implement; however, the information obtained from the system may be too raw to be analytically useful. ABC provides useful information, but by comparison is expensive and time-consuming to implement (Abdallah & Li, 2008).
The use of a given accounting system involves tradeoffs which may make it better suited for some companies than others. Companies using a Six Sigma/theory of constraints (TOC) may benefit more from the throughput accounting (TA) approach. TA emphasizes variable costs, with the objective of increasing throughput while simultaneously decreasing inventories and operating expenses.…
Abdallah, A. & Li, W. (2008). Why did ABC fail at the Bank of China? Management Accounting Quarterly, 9(3), 1-14. Retrieved from http://findarticles.com/p/articles/mi_m0OOL/is_3_9/ai_n31142951/?tag=content;col1
Aghili, S. 2011. Throughput Metrics Meet Six Sigma. Management Accounting Quarterly, 12(3), 12. Retrieved from http://readperiodicals.com/201104/2429844141.html
De Modesti, M.A. & Eriksen, S. (2008). The redesign and implementation of a cost accounting system for America Latina Logistica. Management Accounting Quarterly. Retrieved from http://findarticles.com/p/articles/mi_m0OOL/is_4_9/ai_n31151643/?tag=content;col1
Krumwiede, K. & Suessmair, A. (2008). A closer look at German cost accounting methods: a survey of the cost management systems used by companies in Germany, Switzerland, and Austria. Management Accounting Quarterly. Retrieved from http://webpages.cs.luc.edu/~dennis/florebius/images/Example-1-published.pdf
The consultant allocates fixed costs based on the ratio of departmental square footage to total dealer square footage, adjusted by a weighting factor. The weighting factor takes into account various machinery, equipment, furniture, and fixtures located throughout the dealership. The consultant used a factor of 1, which is an industry standard.
The consultant acknowledges that the departments have very different functions, costs and profits, however his attempt to allocate costs does not adequately take into consideration their differences. I believe that these results are questionable due to the lack of specificity in the financial statements. Given that the revised profitability number will be used to determine if jobs will be eliminated and is also used to determine the body shop manager's bonus, I recommend that if it is available that, Mr. Delaney provides more detailed information on the labor-hours or creates a better measurement system for both fixed and semi-variable…
he contribution margin is the revenue less the variable costs. We know the price for each product, and we know the variable material costs. Labor costs are also know ($5/hr). hus, the remaining issue is the allocation of overhead, which the company does on the basis of direct labor hours.
here are two production constraints. One machine can only be used for A or B, the other machine for only C and D. o maximize contribution margin, the company should produce the product with the highest contribution margin, which in this case is product B and product D. hey have the highest contribution, and contribution margin.
o determine the impact on profits, the current profitability should be compared with the profitability that would arise from the proposed change. A pro forma income statement will illustrate, but of course…
This points to an issue with the allocation. Allocating by labor hours distorts the financials of each product. How it works is this. Product A takes six labor hours, and Product B takes one. Overhead is allocated this way, such that A takes on a lot of overhead allocation while B takes on very little. The problem is that the machine that produces them can only product 2000 units total, and the trade-off between producing one unit of A or one unit of B is even. The overhead allocation is therefore misaligned with actual production constraints because the opportunity cost of producing one unit of A is one unit of B, but the current allocation system prices it like the opportunity cost is 6 units of B. That makes the contribution calculation look like B is a much more viable product. The reality is that A is the more viable product of the two. The current methodology sticks A with so much overhead that it looks like the least profitable product. Take away that overhead and A is worth $53 per unit, B is worth $28.5 per unit. You can only make 2000 units of these combined, obviously 2000 units of A delivers more profit to the company.
The difference between C and D maybe is not as stark, but the same principle applies. The issue is that both of them are unprofitable.
If Premier stopped producing some products, this might increase the demand for the other ones. It might not, however, but that depends on factors like the consumer's propensity to substitute within the brand, or substitute with a comparable product from another brand.
Accounting Course Concepts
With sales of $10.6 billion for the fiscal year ended March 31, 2011, Olympus Corporation (hereinafter alternatively "Olympus" or "the company"), is a leading manufacturer of endoscopic medical devices, cameras as well as other sophisticated imaging devices, microscopes, and information and communications equipment (Verschoor, 2012). According to the company's business profile, Olympus Corporation competes in medical, life science, industrial and the imaging sectors (Business profile, 2014). Currently, Olympus Corporation competes in five primary business segments as follows:
The Medical segment offers medical endoscopes, surgical endoscopes, ultrasound endoscopes and others.
The Life and Industry segment provides biological microscopes, industrial microscopes, industrial endoscopes and non-destructive testing equipment.
The Video segment provides digital cameras and sound recording machines.
4. The Others segment is engaged in the provision of biomaterials, and the development of systems.
5. The Common segment mainly involves in holding investment and financial investment…
Business overview. (2014). Olympus Global. Retrieved from http://www.olympus-global.
Business profile. (2014). Olympus Corporation. Retrieved from http://www.reuters.com/finance / stocks/companyProfile?symbol=7733.T.
Pink sheets. (2014). Investopedia. Retrieved from http://www.investopedia.com/terms/p/ pinksheets.asp.
This memo addresses the concern regarding the production cost report and why you were only credited with only 2,000 units equivalent units in ending inventory. The key question relayed to me is why the credited amount was not considerably higher compared to what you took into consideration earlier. The main reason why this is the case is linked to process costing and the equivalent units of production. There is usually a confusion between the units partially completed and the units totally completed. Basically, equivalent units of production are utilized by a manufacturer for the expression of partially completed units of product with respect to finished units. They key aim of utilizing equivalent units is to have the ability of apportioning the costs of production to completed units as well as partially completed units held in work process. In essence, the notion of equivalent units takes into account articulating a number…
Drury, C. M. (2013). Management and cost accounting. New York: Springer.
Obaidullah, J. (2013). Equivalent Units – FIFO Method. Accounting Explained. [Online]. Retrieved March 22, 2018 from: https://accountingexplained.com/managerial/cost-systems/equivalent-units-fifo
Managerial Accounting for Sleepease Ltd.
"Identify, discuss and critically evaluate the advantages and problems of using the following costing methods for internal reporting purposes":
absorption costing; marginal costing.
"Refer to the Sleepease case as and when necessary"
The absorption costing is the type of managerial costing where both the variable and fixed costs are charged to process or product. Thus, "absorption costing is a method for appraising or valuing a firm's total inventory by including all manufacturing costs as product costs, regardless of whether they are variable or fixed and therefore it is frequently referred as the full cost method." (Nawaz, 2013 p 50).
Accordingly, the company will be able to determine costs of a product after determining both the variable costs and fixed costs. Sleepease will derive several benefits from using the absorption costing for the production of their product.
First, the absorption costing will assist the…
Yet, financial statements and managerial accounting reports can be highly effective nonetheless. Sometimes they will merely confirm what the proprietor already knows, but there are inevitably going to be times when they will reveal that the proprietor's assumptions about the nature of the business are false. Moreover, accounting can act as essentially a second opinion. The proprietor may feel one thing is true, but the numbers can reveal something different.
Overall, accounting is an essential component of any business. Sole proprietorships often make less use of accounting, in part because the law does not obligate them to engage in any more than the most rudimentary accounting. However, proprietors should not overlook the value of accounting. Accounting helps to reveal the business' past performance, but can also be used to enact organizational controls today and to help plant for more effective operations in the future. By understanding the firm's cost structure…
Marshall, David H.; McManus, Wayne W & Viele, Daniel F. (2008). Accounting - What the Numbers Mean. McGraw-Hill/Irwin, New York, 2008.
Wood was used more for recording, ink and seals were used to write accounts on top of a piece of wood. It was used mostly by everyone as it was inexpensive plus it was very easy to write on top of it. Marked stick also played many roles, also known as counting tally. ut in fourteenth century, there was an argument for a decline in tallies and to increase the use of paper which was found in England. Still this was an expensive import, in a result tally remained there for many years along for efficient calculation's an abacus was used.
y 1700, few professional accountants were found in Scotland for the Italian method of book keeping. ut by 1800 there were many professional accountants who were operating in the major Scottish towns as the knowledge of accounting became even more common in the business community. The notable accountants were…
Basil Selig & Robert Henry. "Accounting History: Some British Contributions" 1994. http://www.google.com.pk/books?id=avQ6KzZEzHoC&printsec=frontcover&dq=accounting+history&sig=BzfVxGuY9YCOP2zRSRbDXtQIeCM
An unaware analyst may think the second company to be better but in reality its low encouraging level is due to the fact that it is unable to secure additional funding. The companies may possess different capital structures and to attempt comparison of performance when one is all equity financed and another is a geared company may not suffice for a good analysis. The chosen application of government incentives to several companies may also twist the inter-company evaluation. There may be the possibility of providing a company with the tax holiday while the other within the same line of business not, and evaluation of such two enterprises may be misleading. (Session 15: Limitation of atio Analysis)
As a matter of principle, the accounting strategies are required to be applied persistently. Changes are required to be emphasized and the influence of variations from an original policy revealed. This is applicable when…
Accounting and decision making - Ratio analysis. Retrieved from http://www.learn.co.uk/cima-mc/lesson4/page4.htm Accessed on 22 April, 2005
Basic Financial Statement Analysis: Objective 3: Explain the limitations of ratio analysis. Retrieved from http://www.wu-wien.ac.at/usr/h93/h9352467/Limitations%20on%20Ratio%20Analysis/limitationonra.html Accessed on 22 April, 2005
Cars, Andreas. 2002. The Dynamic Current Ratio. 3 September. Retrieved from http://www.investopedia.com/articles/02/090302.asp Accessed on 22 April, 2005
Covers Information from Accounting 200 and 201. Retrieved from http://www.everettcc.edu/emplibrary/Financial%20Ratios.pdf Accessed on 22 April, 2005
Differential Cost strategy when used by an educational entity such as UOS means that the institution determines what it would cost to offer alternative forms of education based on the number of students interested in choosing those alternative forms. In other words, by offering choices to the students based on the student's specific needs and desires and then measuring the difference in cost when compared to other educational offerings, the school will know exactly what the differential cost is. This allows the school to offer courses and activities in the most efficient and effective manner, and in a manner that produces the highest amount of revenue with the lowest cost. By knowing the difference between the school's offerings and what the same type of offerings are being offered by their competitors, the school will be capable of offering more for less. As an example, if the school…
Dibsa should turn towards the market-based pricing strategy, which sees the implementation of competitive prices for the 3-in-1 Lawnmower. The selection of this combination of strategies would generate several impacts upon the company, but most of them would be obvious at product lifecycle level. In this order of ideas:
The sales revenues would be significantly high throughout the first six months and they would allow the company to cover for the large costs incurred in the manufacturing of the product as well as register profits; they would however decrease with the implementation of the market pricing strategy and the 3-in-1 Lawnmower would metamorphose from a star product into a cash cow
The costs incurred in the manufacturing of the new lawnmower have already begun to decrease and will continue to do so; the actual impact of the pricing strategy is limited, with the specification however that these costs will not…
Berman, K., Knight, J., Case, J., 2006, Financial Intelligence: A Manager's Guide to Knowing what the Numbers Really Mean, Harvard Business Press
Bolander, S.F., Gooding, C.W., Mister, W.G., 1999, Transfer Pricing Strategies and Lot Sizing Decisions, Journal of Managerial Issues, Vol. 11
Drudy, C., 2004, Management and Cost Accounting, 6th Edition, Cengage Learning EMEA
Goetz, Jr., J.F., 1985, the Pricing Decision: A Service Industry's Experience, Journal of Small Business Management, Vol. 23
Another example of pure job costing is web development, where the processes themselves vary hugely from project to project, meaning the cost and time involved also varies.
Dosch & Wilson (2010) do seem to do a good job of defining job and process costing, and the person who posted this seems to have understood these definitions fairly well in the abstract -- that is, the definitions provided seem reasonable and the application of these definitions to businesses chosen by the poster are explained in a way that clearly links them to these definition. At the same, the poster seems to have had some trouble accurately identifying companies where job costing might be employed, despite grasping the abstract technicalities of the definition of job costing. While it is likely that an individual laborer might be able to identify that they worked on a particular section of an airplane or wall…
Chan, Y. (1993). Improving hospital cost accounting with activity-based costing. Health care management review 18(1).
Dosch, J., & Wilson, J. (2010). Process Costing and Management Accounting in Today's
Business Environment. Strategic Finance, 92(2), 37-43. Retrieved from EBSCOhost.
Accounting for Decision Making
Shelter Partnership's Case Study
Purposes of Cost Information
The intended purpose of cost information is to provide a basis for determining the expenses and revenues associated with a particular activity (or cost object). Generally, cost and income is measured in order to determine net income or profit margins. However, as Shelter Partnerships is a non-profit, the cost information forms a basis for the allocation of resources and to assist with decisions about scaling. The cost information of Shelter Partnerships can also be used to address any cycles in the stream of donations and contributions that can impact the overall ability of the non-profit to meet its mission. In addition, since Shelter Partnership regularly applies for grant funding, it is essential that their accounting system be readily interpretable to grant reviewing bodies. Fund development cannot be sustained for long in an environment that is only loosely accountable…
Prestige Telephone Company (2004) [Course Notes ] AIM 4343 Retrieved
ACCOUNTING FOR DECISION MAKING
However, when a shock happens that changes that pattern, the information is no longer relevant. In periods of turmoil, only the most up-to-date information is relevant. The usefulness of the information wanes quickly as the behavior of the company becomes more erratic. After a period of erratic behavior and change, the company may be forced to make internal changes that affect the way they do business. They may make changes that affect their inventory management, sales cycle, stock levels, supply chain, distribution network or other fundamental business functions. New patterns may emerge and the old information no longer applies.
The term "relevancy" can have many different meanings depending on what is happening with the company. A new accounting regime may need to be instituted when a change takes place. Looking at the most recent historical information is one way to determine the relevancy of the accounting information. The analyst needs…
Cadwalader, Wickersham, & Tact LLP. 1999. Application of the Safe Harbor for Forward-
Looking Statements. Findlaw. Accessed April 23, 2009
Giroux, G. (n.d.). American Big Business and Cost Accounting. In a Short History of Accounting and Business. Accessed April 23, 2009
It is known that the membership fee is $26. Using this, the variable cost per member can be calculated, as shown in table 2.
evenue per member (a)
Fixed costs per member (b)
Variable cost (a-b)
If the membership fee is $26 per member, the membership fee, less the fixed cost (at the break even point) will give the variable cost per member.
The information in tables 1 and 2 can be used to assess the number of membership the Snap Fitness will need to sell each month if they wish to make a profit of $10,000 per month. As seen above, it is the contribution per unit that will initially pay for the fixed costs and then the profit. To calculate the sales needed for a predetermined profit level, the required profit should be added to the fixed costs. That total may then be divided by…
Horngren, Charles T; Foster, George; Datar, Srikant M; Rajan, Madhav, (2008), Cost Accounting: A Managerial Emphasis, Prentice Hall
Kinney, Michael R; Raiborn, Cecily a, (2012), Cost Accounting: Foundations and Evolutions, South-Western College Pub
Assuming no other fixed costs
d.). The methods by which this information is gathered will differ based on the type of production that is being undertaken. Cost flow assumptions relates to how costs flow through inventory accounts. This can include FIFO, LIFO, weighted average and other methods. This impacts the costs because it helps to determine which costs are counted for which period. Recording interval capability refers to the points in time when a company takes inventory. Many firms use perpetual inventory, but some firms will take inventory periodically in order to provide this information.
Overall, cost accounting systems provide the information that managers need with respect to the costs of a product. By using a specific system, wherein decisions about methodology are made about each of the five parts of the cost accounting system, the system will be consistent through different products and through different time periods for the same product. This will ensure…
Kinney, M. & Raiborn, C. (2009). Cost accounting: Foundations and evolutions. Mason, OH: Thomson Higher Education.
Martin, J. (no date). What is a cost accounting system? Management and Accounting Web. Retrieved June 23, 2010 from http://maaw.info/5partsofcostsystem.htm
Cooper, R. & Kaplan, R. (1988). How cost accounting distorts product costs. Management Accounting. Vol. 69 (10) 20.
ystems of income and financial position would superimpose standards of normalization upon everyone within the firm. Accounting, thereby, had achieved Foucault's definition of knowledge as power over people per excellence. By the 1950s, however, person as decision-maker replaced this vision of person as machine, and accounting still has power in our society, but a different sort of power. Likewise, accounting still possesses its constructivism (i.e. manner of perceiving a certain stranglehold on reality by emphasizing certain construct and demoting others), although its constructivist paradigm may have differed from that of, say, a century ago. Individuals are viewed, measured, and criticized within programmatic frameworks, and Miller and O'Leary (1987) suggest that accounting today can still be viewed as part of the heritage and structure (albeit slightly changed) of the traditional mode of power that it was in the early decades of this century. In other words, the slanted domination of accounting…
Armstrong, P. 2002, "Management, Image and Management Accounting. Critical Perspectives on Accounting, 13, pp. 281-295
Bryer, R. 2006, "Accounting and control of the labour process" Critical Perspectives on Accounting, 17, pp 551-598.
Chwastiak, M. & Young, J.J. 2005, "Silences in Annual Reports, Critical Perspectives on Accounting, 14, 533- 552
Ezzamel, M., Lilley, S. & Willmott, H. 2004, "Accounting representation and the road to commercial salvation." Accounting, Organizations and Society, 29, pp. 783- 813.
accounting important success firm? What methods cost accounting ? The paper (a) identify main issues chosen area, (b) reference learning occurred, (c) build class activities incidents facilitated learning understanding, (d) present specific current / future applications relevance typical workplace.
Cost accounting -- definition, importance, methods
The modern day society is constantly presenting the economic agent with more numerous and more pressing challenges. In order to face them and emerge as a competitive institution, firms develop and implement a wide array of strategies, such as creating customer value, developing the skills of the staff members, establishing strategic partnerships or creating financial stability and accountability. One specific means in this endeavor is represented by cost accounting, which represents a key to organizational success. The current project focuses on the identification of the reasons as to why cost accounting is important to organizational success. A secondary research objective is that of pin pointing…
Pizzey, A., 1989, Cost and management accounting: an introduction for students, 3rd Edition, SAGE
2009, Cost accounting definition, Accounting for Management, http://www.accountingformanagement.com/cost_accounting_definition.htm last accessed on January 26, 2011
2010, Activity based accounting, Accounting Coach, http://www.accountingcoach.com/online-accounting-course/35Xpg01.html last accessed on January 26, 2011
2010, Cost accounting, Investopedia, http://www.investopedia.com/terms/c/cost-accounting.asp last accessed on January 26, 2011
When it comes to standard costing, what is referred to as a standard cost is assigned the costs (actual) of manufacturing overhead, direct labor as well as direct material. In this case, these costs are not assigned to a product. It therefore follows that amounts mirroring standard costs are what become identified first in regard to the cost of goods sold as well as inventories of a given manufacturer. In this case, it can also be noted that standard costing is regarded a rather important tool of management. Incase of any variance, the top leadership of the organization immediately becomes aware of the variation between planned/standard costs and manufacturing costs.
The information provided by cost accounting is critical when it comes to the effective management of an organization. Without such information, decision making would become an equivalent of operating in the dark for most businesses. For instance, firms would…
Brammertz, W., Akkizidis. L., Breymann, W., Entin, R. & Rustmann, M. (2009). Unified Financial Analysis: The Missing Links of Finance. West Sussex: John Wiley & Sons.
Drury, C. (2007). Management and Cost Accounting (7th ed.). London: Cengage Learning EMEA.
Needles, B.E., Powers, M. & Crosson, S.V. (2010). Principles of Accounting (11th ed.). Mason, OH: Cengage Learning.
Siegel, J.G. & Shim, J.K. (2000). Accounting Handbook (3rd ed.). New York: Barron's Educational Series.
financial crisis was abusive off-balance sheet accounting. Abusive off-balance sheet accounting led to a daisy chain of ineffective and dysfunctional decision-making because it removed transparency from regulators, investors, and markets. Spread of derivative transactions, bad loans, and securitizations brought a once stable financial system to the edge of ruin. While improvements have been made, the FASB's guidelines suffer from two main flaws. The first is lack of congressional mandate. With no clear congressional mandate, FASB and SEC guidelines remain subject to the same type of interpretation that led to the growth of 'regulatory arbitrage' or what others may pen as financial engineering, meaning shifting debts off-balance sheets. This means a company must consolidate a VIE only when it possesses 'control' and has the right to receive benefits and access to VIE's 'most pertinent activities' making the design of the guidelines qualitative in nature (Stickney, 2010).
The guidelines then require assumptions…
Larkin, R. & Ditommaso, M. (2016). Wiley Not-for-Profit GAAP 2016. Wiley.
Ramanna, K. (2016). Why "Fair Value" Is the Rule. Harvard Business Review. Retrieved 24 October 2016, from https://hbr.org/2013/03/why-fair-value-is-the-rule
Shaik, K. (2014). Managing Derivatives Contracts. Berkeley, CA: Apress.
Stickney, C. (2010). Financial accounting. Mason, OH, USA: South-Western Cengage Learning.
accounting systems, their tradeoffs, and discusses the differences between countries in their approaches.
Each of the cost accounting systems discussed in the articles accomplishes some management goals better than other systems, but there are tradeoffs involved with each. Different nations approach their cost accounting systems differently due at least in part to differences within cultures. For instance, GP is more suited to countries where the culture is one of uncertainty avoidance, one of the five dimensions of Hofstede's taxonomy. GP offers the most uncertainty avoidance because there is relatively little ambiguity in the assignment of costs; GP is characterized by narrowly defined cost centers and strict cost center criteria. Cultures such as Germany's are characterized by a management environment that includes highly skilled workers and technical expertise among managers. This is in contrast to the U.S. where workers tend to have more generalist skill sets and managers have been educated…
Krumwiede, Kip & Suessmair, Augustin, (2008). A closer look at German cost accounting methods: a survey of the cost management systems used by companies in Germany, Switzerland, and Austria. Management Accounting Quarterly. Retrieved July 26, 2010, from http://findarticles.com/p/articles/mi_m0OOL/is_1_10/ai_n31370936/?tag=r bxcra.2.a.55
Lockhart, Julie & Taylor, Audrey, (2007). Environmental considerations in product mix decisions using ABC and TOC. Management Accounting Quarterly. http://proquest.umi.com/pqdweb?index=0&did=1411673321&SrchMode=1&sid=9&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1301590287&clientId=29440
Portz, K. & Lere, J.C. 2010. Cost Center Practices in Germany and the United States: Impact of Country Differences on Managerial Accounting Practices. American Journal of Business. Muncie: Spring, 2010. Vol. 25, Iss. 1; pg. 45. http://proquest.umi.com/pqdweb?index=25&did=1992507361&SrchMode=1&sid=6&Fmt=2&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1315214891&clientId=29440
The delivery health care system takes into account the assimilation of physicians, healthcare facilities, together with other medical services with plan to facilitate the provision of the total continuum of medical care for its consumers. In a whole incorporated system, the three fundamental components including physicians, medical facilities and the membership to health plans are counterpoised in terms of equating medical resources with the necessities of patients and purchasers (Coddington, Moore, and Fischer., 1994). One of the key concerns in the present delivery of healthcare is cost. Increasing costs of healthcare has been a major worry in the past number of years, making the United States to have one of the most expensive systems of healthcare. The main objective of this paper is to analyze the different costs linked to healthcare delivery system, and delineate the manner in which these costs impact different populations and how it also affects…
This accounting report is intended to emphasize the importance of the role of a management accountant in business operational and financial decisions. The focus on two companies engaging in different lines of business with disparate concerns, questions, and issues provides a basis for the reader to understand specific instances in which a management accountant can play a pivotal role in the success of an enterprise. W. White Chemicals was perplexed about their loss of market share and a small drop in revenue. When the executives came together to discuss the problems, they each had a different opinion about the source of the problem and the possible solutions. The management accountant was able to demonstrate how a change from the traditional accounting system the company was using to an activity-based system would help the team interpret the market situation and get a handle on the actual, rather than the obfuscated,…
Fontinelle, A. (2014). What management accountants do. Investopedia. Retrieved from http://www.investopedia.com/articles/professionals/041713/what-management-accountants-do.asp
The role of financial statements in investing is that they provide a consistent format that can be used by potential investors and other stakeholders to evaluate a company. There are several components that facilitate this happening. For publicly-traded firms, Generally Accepted Accounting Principles (GAAP) play a key role in the creation of financial statements. GAAP is a common set of accounting principles and procedures that companies use to compile their financial statements (Investopedia, 2012). ith companies having to produce their statements according to a common set of criteria, the information is easier to compare not only between different years at the same company, but also against other firms in the industry and all other publicly-traded firms.
The IFRS is essentially the international version of GAAP. Financial statements in many countries, especially those in Europe, are produced according to IFRS. There are a many areas where GAAP and IFRS diverge,…
AICPA. (2011). International financial reporting standards (IFRS): An AICPA backgrounder. AICPA. Retrieved March 22, 2012 from http://www.ifrs.com/pdf/IFRSUpdate_V8.pdf
Beiersdorf 2011 Annual Report. Retrieved March 22, 2012 from http://www.beiersdorf.com/GetFile.ashx?id=3243
Investopedia (2012). Generally Accepted Accounting Principles (GAAP). Investopedia. Retrieved March 22, 2012 from http://www.investopedia.com/terms/g/gaap.asp#axzz1pmKm2c8C
Revlon Fiscal Year 2011 Form 10-K. Retrieved March 22, 2012 from http://services.corporate-ir.net/SEC/Document.Service?id=P3VybD1odHRwOi8vaXIuaW50Lndlc3RsYXdidXNpbmVzcy5jb20vZG9jdW1lbnQvdjEvMDAwMTE5MzEyNS0xMi0wNjUzMTAvZG9jL1JldmxvbkluYy5wZGYmdHlwZT0yJmZuPVJldmxvbkluYy5wZGY=
Accounting forms the overall backbone of the financial world. Financial markets are predicated on consumer and user confidence. Without confidence, consumers attempting to make financial decisions will be doing so using inaccurate and incomplete information. The lack of transparency regarding the truthfulness of reported numbers creates uncertainty within the capital markets. This uncertainty regarding the accuracy of information ultimately undermines the overall financial system, causing harm to society in the process. Investors will require higher rates of return, individuals will become unlikely to invest, and innovation could become stifled, harming the quality of life for society overall. Accounting standards, particularly those from the IFRS, are required to help maintain confidence in the reliability of reported financial performance. These standards, such as IFRS , are often amended to reflect the economic realities of business transactions. These changes, although well intended, may often have unintended consequence. This is particularly true for IFRS…
8) Jeffers, Agatha; Mengyu Wei; Sidney Askew (2010). "The Switch from U.S. GAAP to IFRS." Proceedings of the Northeast Business & Economics Association: 48 -- 54
9) Oler, Derek K., Mitchell J. Oler, and Christopher J. Skousen. 2010. "Characterizing Accounting Research." Accounting Horizons 24 (4): 635 -- 670
10) Perks, R.W. (1993). Accounting and Society. London: Chapman & Hall. p. 16. ISBN 0-412-47330-5.
The Statement of Owners' Equity
The statement of owner's or shareholders' equity is designed to show the components of the change in equity from the end of one fiscal year to the next. Beginning with the amount of equity shown at the end of the previous fiscal year, net income is added and cash dividends paid to the owners are subtracted. If owners contributed any additional capitol this amount (such as the sale of new shares) it is added to the equity. On the other hand, if the owners withdrew capitol, equity declines. All the additions and subtractions, taken together, equal the changes in owner equity from one fiscal year to the next (Kurtz, 2010).
The Statement of Cash Flows
Public companies are required to prepare and publish a statement of cash flows. This statement provides investors and creditors with relevant information about a firm's cash receipts and cash payments…
Kurtz, D.L. (2010). Contemporary Business, 13th ed. Hoboken, NJ: John Wiley & Sons Inc.
"The Four Financial Statements" (NDI). The four financial statements. QuickMBA. Retrieved July 24, 2011, from http://www.quickmba.com/accounting/fin/statements/
There are a couple of different issues with the Smith Company statements. The first question relates to the $45,500 worth of products. This would not be recorded as income, because the customer has not committed to the purchase. Revenue recognition rules hold that revenue cannot be recognized until the sale has been finalized (Investopedia, 2013). This revenue must be removed from the income statement. hile the description of the situation is unclear, it appears that this amount was removed from the revenue already, so that the $406,000 in revenue on the income statement is the correct amount.
The next issue is the inventory problem. The inventory account is currently showing $25,000, which was the result of a physical count. There was no adjusting entry to the inventory for the $45,500 that was added to and subsequently removed from revenue. The question appears to be implying, when it should be…
AccountingTools.com. (2013). The matching principle. AccountingTools.com. Retrieved March 9, 2013 from http://www.accountingtools.com/matching-principle
Investopedia. (2013). Revenue recognition. Investopedia. Retrieved March 9, 2013 from http://www.investopedia.com/terms/r/revenuerecognition.asp#axzz2N52vD1oy
The findings of this report will be valuable to two different audiences. The first consists of accounting regulatory bodies. These bodies are working towards convergence and are presently struggling with the resistance from the business community. Understanding the nature of that resistance is key to finding ways of overcoming it. For the large publicly traded corporations themselves, this report will help them understand why they and their peers are resistant, and this will shed light on whether or not that resistance is justified. Convergence is coming whether the corporate world is ready for it or not, but the key for corporations is to understand what convergence is, why it is important, and which elements of their resistance are not worth the effort. For both parties, it is important to work together to make the convergence process as smooth as possible, and that is going to take a greater…
Qu, X. & Zhang, G. (no date). Measuring the convergence of national accounting standards with International Financial Reporting Standards: The application of fuzzy clustering analysis. Xiamen University. In possession of the author.
Larson, R. & Street, D. (2004). Convergence with IFRS in an expanding Europe: Progress and obstacles identified by large accounting firms' survey. Journal of International Accounting, Auditing and Taxation. Vol. 13 (2004) 89-119.
AICPA. (2011). International Financial Reporting Standards (IFRS): An AICPA backgrounder. American Institute of CPAs. In possession of the author
AICPA (2010). Financial system considerations in IFRS conversion projects. American Institute of CPAs. In possession of the author.
Such adjusting entries will help to improve the accuracy of financial statements. Adjusting entries is necessary because accrual accounting systems demand that the events are recorded accurately. They are not to be recorded strictly on the basis of cash transactions, and all of these adjustments serve to translate the accounting figures that arise from the cash accounting to accrual accounting by incorporating all of the different non-cash transactions and ensuring that every element of the income statement and balance sheet is correct.
On a computerized accounting system, there might be software that can actually make these entries. If not they will need to be entered manually into the system.
As with any accounting, there are certain ethical issues that need to be understood. The accrual statements are where we report our profits and losses. It is important that they are completed accurately. Any fraud is illegal and cannot be tolerated.…
No author. (2012). Adjusting entries. Accounting Coach.com. Retrieved November 29, 2012 from http://www.accountingcoach.com/online-accounting-course/08Xpg01.html
Accounting and Intrusion Detection
In a report issued by Paladin Technologies, Inc., entitled: "Security Metrics: Providing Cost Justification for Security Projects," 273 organizations were surveyed on the topic of security. The report illustrates in quantifiable terms the depth and reach of intrusion detection on the financial viability of the organization. The combined reported losses from the firms surveyed totaled $265.6 million in 1999. The highest loss categories were reported as follows:
Type of Loss
Estimated Dollar Value
Number of espondents
Theft of intellectual capital
The average annual financial loss of firms surveyed was estimated at $40 million. Forty three percent of respondents were able to quantify financial losses, and seventy four percent were able to acknowledge financial loss. Ninety percent detected cyber attacks within the most recent twelve-month period and seventy percent reported serious breaches other than viruses, laptop theft, and employee abuse of…
Risk Assessment risk assessment involves estimating the likelihood and severity of an occurrence, the relative impact of risk on the facility, information handler, processing, support, and the mission of the organization. Assessing the likelihood means determining the probability that existing controls will be skirted. Pfleeger has identified a series of steps for examining the likelihood of adverse occurrences:
Calculate the probability that the risk may happen, found in the observed data for the specific system.
Estimate the likely number occurrences in a given time period. The analyst gives a rating based on several different risk analysis methodologies, and then creates a table to hold and compare the ratings.
The Delphi approach: several raters individually estimate the probable likelihood of an event, combine their estimates, and choose the best one.
Absence of adjusting entries would most likely to either understate or overstate the accounts in the period of reporting and will have an adverse effect on the following reporting period. This is true except for bad debts or doubtful accounts and depreciation. eing in nature of an expense accounts and valuation accounts, absence of adjustments would overstate the operational performance of the business and at the same time overstate valuation of the particular asset it is supposed to reduce to its realizable value. Such absence would affect only the particular period where adjustment was omitted. To illustrate, salaries and wages of workers should be recorded as expense for the period, even if the actual payment falls on the following period. Failure to record the expense would understate salaries and wages for the year as well as understatement or omission of a liability regarding the same. The effect is an overstated…
Adjusting Entries (2007). Retrieved April 19, 2007, at http://www.netmba.com/accounting/fin/process/adjusting
Trial Balance. (2007). Retrieved April 19, 2007 from http://www.quickmba.com/accounting/fin/trial-balance
Petty Cash account (2007). Retrieved April 19, 2007 from http://www.elca.org/treasurer/congregations/pettycash.html
Accounting for Postretirement Health Care and Life Insurance Benefits necessitates disclosures regarding an employer's accounting. These include a delineation of the provision of benefits and the groups of employees given coverage, a delineation of the employer's prevailing accounting and financing policies for such benefits and lastly the cost of such benefits acknowledged for the period. In particular, this is effective for the financial statements prepared by organizations for the financial period ending subsequent to December 15, 1984 with respect to postretirement health care and life insurance benefits that are provided not only in the United States but also international nations. Nonetheless, for financial periods prior to June 15, 1985 that lack data and information regarding benefits provided in foreign nations, it is not mandatory to include them (FASB, 2017).
Moreover, the net pension liability or net pension assets have to be included in the financial statements as an asset or…
Accounting for Partnerships
Businesses can be classified into various forms of ownership. In this text, I concern myself with partnerships. In so doing, I will discuss partnerships and the various advantages as well as disadvantages associated with this form of business ownership. Further, I will also highlight the Financial Accounting Standards (FAS) governing accounting for this form of business ownership from creation and operation to liquidation. Partnerships' tax consequences will also be discussed.
Partnerships: Advantages and Disadvantages
Just like any form of business ownership, partnerships also do have several advantages and disadvantages. A partnership according to Needles, Needles and Powers (2010) is "an association of two or more persons to carry on as co-owners of a business for profit." In that regard, a partnership is formed when two or more people come together with an aim of initiating a business activity. Individuals may be motivated to start a partnership form…
Clifford, D.C., Warner, R.E. & Warner, R. (2008). Form a Partnership: The Complete Legal Guide (8th ed.). Berkeley: Nolo.
Eisen, P. (2000). Accounting (4th ed.). Hauppauge, New York: Barron's Educational Series.
Needles, B.E. & Powers, M. (2010). Financial Accounting (11th ed.). Mason, OH: Cengage Learning.
Pride, W.M., Hughes, R.J. & Kapoor, J.R. (2011). Business (11th ed.). Mason, OH: Cengage Learning.
Accounting and Finance
Henkel AG is a multinational company focusing its brand and technologies in three business areas that include Beauty Care, Laundry & Home Care and Adhesive Technologies. Established in 1976, the company holds its global market positions in both the consumer and industrial products with well-known brands that include Lactate, Persil, and Schwarzkopf. Henkel's headquarter is in Dusseldorf in German and the company has over 47,000 employees globally. Typically, the company is considered among the most "internationally aligned German-based companies in the global marketplace." (Henkel 2012).
Objective of this paper is to use various financial models to carry out financial analysis and valuation of financial Henkel AG.
One of the methods to carry out the valuation of a company is to use enterprises discounted cash flow (DCF). The DCF could be carried out using WACC (weighted average cost of capital) that represents the opportunity costs that…
Accounting for Decision Making
Roland Anderson is the manager of the Ekland Division of Ystad Industries and has some decisions to make based on accounting data. Anderson is also being considered for the CEO position of the company which makes his dilemma even greater. He is unhappy with the profitability for the first quarter and is considering maxing out the capacity of the operation in the second quarter. It was found that Anderson actually performed fairly well based on the assumption that his actual costs were below the variable costs provided in the case using the contribution method. Doubling the production plan would be an unwise move given the fact that the sales forecast is only for twenty five thousand units. Thus if he produces fifty thousand units he would have greater inventory and it is likely that he would have to cease operations and let some workers take a…
a) i) Using direct labour hours as the cost driver for the overhead costs, the following table presents the net profit calculation for each line of motorcycle:
Activity-based costing is designed to allocate overhead costs based on the resources that each activity consumes (The Economist, 2009). The key to activity-based costing is that the cost drivers are assigned differently, and in a manner that should better reflect actual resource usage than a cost driver that may be picked almost at random (Investopedia, 2013). Using ABC, the following are the net profit calculations for the three different products at Vroom.
The Economist. (2009). Activity-based costing. The Economist. Retrieved November 12, 2013 from http://www.economist.com/node/13933812
Investopedia. (2013). Activity-based costing. Investopedia. Retrieved November 12, 2013 from http://www.investopedia.com/terms/a/abc.asp
Accounting and Finance
Comparison of Selected Financial Performance Data for WalMart and Target
WalMart and Target compete in very similar markets, competing in the supermarket segment of the retail industry, with some diversified interests. To assess the performance of these two firms, their results for the financial years ending January 2012 and 2013 may be examined and compared. This paper will look at the performance in terms of revenues, cost of goods, accounts receivable and payable and inventory management.
The performance of a firm often starts with an assessment of the revenue that is generated and the way in which this changes over time. The revenues for both WalMart and Target are shown in table 1.
Table 1; evenue for WalMart and Target 2012-2013
evenues ($ millions)
Change in revenues from previous year
The levels of revenues demonstrate that…
Target, (2013), 10k, retrieved https://corporate.target.com/_media/TargetCorp/annualreports/content/download/pdf/Annual-Report.pdf?ext=.pdf
WalMart, (2013), 10k, retrieved http://www.sec.gov/Archives/edgar/data/104169/000010416913000011/wmt10-k.htm
Kaplan and Anderson (2005) notes that activity-based costing (ABC) systems are not as effective in practice as they are on paper. Among the grievances that Kaplan notes with respect to ABC, the system is not very scalable, losing power as the company gets larger. The textbook version is usually a very simple company with a handful of activities, but in the real world companies can have hundreds of products, thousands of activities and tens of thousands of customers. This presents a challenge, because activity-based costing requires a substantial amount of information in order to be effective. Past a certain scale of organization, activity-based costing does not deliver a good return on investment because of the costs associated with gathering and analyzing this information. Kaplan wrote this in 2005, mind you, when perhaps information gathering and processing capabilities were somewhat worse than they are today. Certainly doing ABC manually is…
Gilbert, S. (2007). Adding time to activity-based costing. Working Knowledge. Retrieved March 15, 2014 from http://hbswk.hbs.edu/item/5657.html
Kaplan, R. & Anderson, S. (2005). Rethinking activity-based costing. Working Knowledge. Retrieved March 15, 2014 from http://hbswk.hbs.edu/item/4587.html
Joint costing systems should bear in mind the legal constraints on the use of such systems, and should provide accurate information to managers in order to be most useful in the managerial accounting context.
Firms need to remain competitive, which indicates that the market will set prices to some degree. This implies that firms can make better decisions with respect to what projects/products they wish to pursue by understanding the cost structure of the product. If the product is not viable at the cost at which it can be produced, then the firm can improve profitability by dumping the product.
Banham, R. (2000). Off target? CFO Magazine. Retrieved April 5, 2011 from http://www.cfo.com/article.cfm/2990860/c_3046531?f=magazine_alsoinside
Frederick, S. (2011).
The persuasive power of opportunity costs. Harvard Business Review. Retrieved April 5, 2011 from http://hbr.org/2011/01/column-the-persuasive-power-of-opportunity-costs/ar/1
Katz, D. (2002). Activity-based costing (ABC). CFO Magazine. Retrieved April 5, 2011 from http://www.cfo.com/article.cfm/3007694
McKinsey & Co.…
Banham, R. (2000). Off target? CFO Magazine. Retrieved April 5, 2011 from http://www.cfo.com/article.cfm/2990860/c_3046531?f=magazine_alsoinside
Frederick, S. (2011).
The persuasive power of opportunity costs. Harvard Business Review. Retrieved April 5, 2011 from http://hbr.org/2011/01/column-the-persuasive-power-of-opportunity-costs/ar/1
Katz, D. (2002). Activity-based costing (ABC). CFO Magazine. Retrieved April 5, 2011 from http://www.cfo.com/article.cfm/3007694
Accounting and Audit Enforcement
1. The Sarbanes-Oxley Act applies to publicly-traded companies. Thus, it does not apply to non-profit entities. Nor does it apply to for-profit entities that are not publicly-traded. This is because SOX was passed specifically to address instances of accounting fraud in publicly traded companies that were undermining consumer trust in the capital markets (101.com, 2018). A publicly traded companies has a variety of different obligations under SOX that will help to reduce the opportunities and incentives for accounting fraud. Both opportunity and incentive are components of the fraud triangle – one needs to have a perceived need to commit the fraud and the circumstances with which to do so (ACFE, 2018).
Non-profit organizations have no obligations under SOX. However, there is a school of thought that holds that non-profit entities can benefit from some of the recommendations and mandates that SOX contains. Fritz (2016) writes that…
ABC Overall risk profile
The ABC Company may face series of risks based on the current industry and economic issues. First, the company is operating in a competitive market environment making the company to face a fierce competition from other companies producing similar products. Thus, the ABC Company may likely to lose some of its customer to competitors if the price per product is too high.
Moreover, the current recession may affect the purchasing power of customer, which may affect the company annual revenue. Moreover, inflation is likely to increase the cost of production. Another risk issue is that the company should satisfy its shareholders by declaring high dividends and failure to satisfy the shareholder may make some shareholders to disinvest their fund from the company, which may make the company to lose the public image. (Daniel, Njikizana, . & Chamboko, 2011).
Current ABC cash flow using Direct…
Bragg, S.M. (2011). The Controller's Function: The Work of the Managerial Accountant, (Fourth Edition) UK. Wiley .
Daniel, B.M. Njikizana, C.T. & Chamboko, R. (2011). Interpretation and Application of International Financial Reporting Standards.UK. Wiley.
"Management believes that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates actual results could differ from the original estimates, requiring adjustments to these balances in future periods."
ased on the data retrieved and the projections made, the accounting division will proceed to the development of the consolidated statements for all of GM subsidies and the overall group. There are 24 consolidated statements, as follows: Discounted Operations; Asset Impairment; Investment in Nonconsolidated Affiliates; Marketable Securities; Variable Interest Entities; Finance Receivables and Securitization; Inventories; Equipment on Operating Leases; Income Taxes; Property - Net; Goodwill and Intangible Assets; Other Assets; Accrued Expenses, Other Liabilities and Deferred Income Taxes; Long-Term Debt and Loans Payable; Pensions and Other Postretirement enefits; Commitments and Contingent Matters, Stockholders' Equity; Earnings per Share Attributable to Common Stocks; Derivative Financial Instruments and Risk Management; Fair Value of…
1. 2007 General Motors Annual Report. Page 9. On the Internet at http://www.gm.com/corporate/investor_information/docs/fin_data/gm07ar/download/gm07ar_full.pdf.Last retrieved on February 15, 2009
2. General Motors Mission Statement, 2009, on the internet at http://www.samples-help.org.uk/mission-statements/general-motors-mission-statement.html . Ast retrieved on February 16, 2009
3. Supplier Diversity, Website of General Motors, 2009, on the internet at http://www.gm.com/corporate/dealers/diversity/index.jsplast retrieved on February 16, 2009
4. Management's Discussion and Analysis, Website of General Motors, 2009, on the internet at http://www.gm.com/corporate/investor_information/docs/fin_data/gm07ar/content/financials/mda/mda_10.htmllast retrieved on February 16, 2009
The Impact of Distance Learning in Accounting Higher Education
This paper is intended as an Introduction to a research study in to the impact of distance learning on the teaching of accounting in higher education. The context of the research will first be introduced i.e., the background to the research. The research to be undertaken will then be introduced, as will the specific questions and sub-questions to be addressed. The significance of this study will then be analyzed, and the people who are expected to benefit from this research will also be outlined. The research methodology and the practical design of this research methodology will be discussed, and the primary and secondary sources to be used will be introduced, and a list of preliminary resources will be given in the ibliography.
Distance learning has grown in popularity amongst students over recent years, for many reasons, one of which has…
Anne Nicholls, Flexible study opens doors., Independent on Sunday, 01-14-1996, pp 12.
Serwatka, Judy A, Improving student performance in distance learning courses., THE Journal (Technological Horizons In Education), 04-01-2002, pp 46.
Mariola, Eleni; Manley, John, Teaching finance concepts in a distance learning environment -- a personal note., Journal of Education for Business, 01-01-2002, pp 177
The second question is the cost per unit to produce a given product or deliver specific service. Just as the total cost of revenues for a business, this figure will also provide a business owner with insights into how their business is operating, from the supply chain through pricing and distribution of gross margin assumptions (Hall, 2010). The cost per unit to produce is also a good measure of how well the efficiency of a given company is running at. Often a business owner will evaluate these from the standpoint over the long-term, looking for trends in hwo their business is operating at an efficiency level that makes the entire company profitable. For services business, the cost per service event or services deliver (as a plumber making a house call) needs to have a minimum charge level as costs are allocated across all forecasted calls in a given month. This…
Hall, M. (2010). Accounting information and managerial work. Accounting, Organizations and Society, 35(3), 301.
Jansen, E.P. (2011). The effect of leadership style on the information receivers reaction to management accounting change. Management Accounting Research, 22(2), 105.
A senior executive in a Fortune 500 firm along with their colleagues on the company's management team are dependent on accurate, timely, and pertinent financial information regarding the health of the organization. Accounting information has aptly been described as "the language of business, which is used in the management, planning, control, and decision- making processes integral to achieving organizational objectives" (Marshall, D. & McManus, W. 1996). In this regard accounting information falls into distinct categories: financial and managerial accounting; yet with considerable overlap in their utilization by management. Explication of these accounting areas provides considerable insight into their utility in providing effective quantitative data for analysis.
Financial and Managerial Accounting
Financial accounting concerns itself with the "preparation and reporting of financial statements for an entity" (Marshall, D. & McManus, W. 1996); while managerial accounting "is concerned with providing information to managers- that is, to those who are inside…
Likewise, managerial accounting also utilizes financial data to reach conclusions as to how the company is operating and what if any corrections are necessary to enhance profitability. In this vein managerial accounting concerns itself with the analysis of costs, budgeting, performance, and capital expenditures. Managerial accounting information is highly detailed and provides a platform from which to judge the company's revenue creation and its cost controls. As examples, an executive management team might take considerable time analyzing activity based-costing; a "system identifying the activity that causes the incurrence of a cost" (Marshall, D. & McManus, W. 1996). This data could lead to a discussion on the company's operating leverage based on their orientation of fixed or variable costs. While both financial and managerial accounting provides detailed data concerning company performance, managerial accounting has a distinctive narrowness to its scope of focus.
Communication of Information
With volumes of financial information generated by a Fortune 500 firm's accounting department, the question becomes how
A static budget is defined as a budget that is "planned ahead of time based on the owner's best guess about future actual activity." This type of budget is therefore put together for the upcoming time period, and is often based on the data from past time periods, plus or minus different adjustments that management thinks will be necessary. In contrast, a flexible budget is one where the business management can make changes in the midst of an accounting period. Flexible budgeting allows for management to make better decisions on the fly, because the information used in those decisions is kept more up-to-date. Static budgeting relies only on the ability of management to analyze the numbers after the period in order to determine the magnitude and direction of variance, along with the causes of variance. For a flexible budget, management can identify issues with the budget right away, and…
Mueller, D. (2012). Static budget vs. flexible budget. eHow. Retrieved September 12, 2012 from http://www.ehow.com/info_7784641_static-budget-vs.-flexible-budget.html
Bigelow, L. (2012). Static vs. flexible budgets for new businesses. Houston Chronicle. Retrieved September 12, 2012 from http://smallbusiness.chron.com/static-vs.-flexible-budgets-new-businesses-20879.html
Operating income it typically defined to include all operating expenses other than depreciation and taxes (Investopedia, 2011). Because the airplanes are leased, there is no depreciation for West Coast Airlines to take into consideration anyway. The operating income is as follows:
Food & Beverage
The company right now is losing $31,012.50 on every one-way flight to Fiji.
If the company lowers the cost of the flight in order to generate an increase in volume, the operating income figures will look as follows:
Food & Beverage
By these figures, Fiji Air loses $28,924 per one-way flight with the lower ticket price and the higher average number of passengers. The bigger issue is that even under this…
Investopedia. (2011). Operating income. Investopedia. Retrieved February 8, 2012 from http://www.investopedia.com/terms/o/operatingincome.asp#axzz1lna6LUYy
No author. (2012). Break-even point. Accounting Coach.com. Retrieved February 8, 2012 from http://www.accountingcoach.com/online-accounting-course/01Xpg01.html
Another factor that should be taken into consideration is that of overall strategy. Financial statements are snapshots, and sometimes it can be difficult to discern from looking at a small sample of them the firm's overall direction. Key strategic decisions can have a significant impact on the financial statements for a limited period of time. For example, during the period studied FedEx was having trouble absorbing Kinko's which it had purchased. These difficulties are not fully reflected on the income statements for 2005 and 2006. Instead, they appear as an unusual item (a writedown) in 2008. Likewise, UPS took a $6.1 billion writedown in 2007, which made the financial figures for that year look terrible. There is always strategic context in financial statements. That context is not always readily apparent, but it should be taken into consideration when analyzing the financial statements.
The potential impact of mergers and acquisitions should…
, 2010). Where there is the sale of shares, there is also a great potential that the existing owners will have little control over who the shares are subsequently sold to, especially in a quoted company. The firm will also be subject to the Sarbanes-Oxley Act (SOX), which was also known as the "Company Accounting eform and Investor Protection Act," in the Senate (Libby et al., 2010).
Decision for the Business
As the business is a new idea, and will initially only involve a single person, the idea of a partnership may be eliminated. This leaves sole proprietorship and corporation. If there is to be only one owner the S-corporation may be used, as this may accommodate a single shareholder. This structure may be attractive as the business will be a separate entity, especially as the owner will not carry any personal liabilities for the business debts. However this…
Clarkson, Kenneth W; Miller, Roger LeRoy; Cross, Frank B, (2010), Business Law: Text and Cases - Legal, Ethical, Global, and Corporate Environment, Cenage Learning
Libby, Robert; Libby, Patricia; Short, Daniel, (2010), Financial Accounting, McGraw-Hill
Weygandt, J, J; Kieso, DE; Kimmel, PD, (2011), Financial Accounting, Wiley
The business idea has been set up in a manner which can be easily changed by the student, without impacting on the rest of the paper.
Operating Leverage, Return on Investment, Economic value added and Net Profit Margin at Yum Brands
A firms performance is often measured using ratios. There are many different ratios which are used, all indicating different types of performance measurement; four of these measures are operating leverage, return on investment (ROI), economic value added (EVA) and net profit margin. These all provide the ability to perform historical assessment to assess the trends or patterns in the firms' performance when measured against itself, as well as allowing the firm to be assessed against other competitors or potential alternate investments. Each of the ratios will be examined and considered in the context of Yum Brands
Operating leverage is a ratio which shows the companies fixed coasts to variable costs. To calculate the ratio it is necessary to have details of the fixed and the variables costs for the items produced. The…
CVP is very useful for small business also because the analysis takes
into consideration variables like eturn on Investment, or Customer
Acquisition Cost. This analysis allows the company to determine what the
maximum profit volume can be, and how the above mentioned variables can be
changed in order to become successful.
CVP analysis is also able to determine the results of media campaigns,
especially for small business, where results are more visible and can be
observed after a shorter period of time. Furthermore, these results can be
translated into a successful company strategy, given the fact that the
strategy would be based on verified results. In relation to this, market
share can increase due to such a strategy.
For small business, CVP analysis is also used in establishing the
company's budget for certain activities. The analysis is able to provide a
flexible budget variant, which is exactly what a small…
1. Cost Volume Profit Analysis (2008). Business Owner's Toolkit.
Retrieved May 14, 2008 from
2. CVP Analysis (2008). Wikipedia, the free encyclopedia.
Retrieved May 14, 2008 from
3. Kee, Robert (2007). Cost volume profit analysis incorporating
b. An issue of bonds that is sold simultaneously in several countries is traditionally called a (n) eurobond.
c. If a lender ranks behind the firm's general creditors in the event of default, the loan is said to be subordinated.
d. In many cases a firm is obliged to make regular contributions to a (n) sinking fund, which is then used to repurchase bonds.
e. Most bonds give the firm the right to repurchase or call the bonds at specified prices.
f. The benchmark interest rate that banks charge to their customers with good to excellent credit is generally termed the prime rate.
g. The interest rate on bank loans is often tied to short-term interest rates. These loans are usually called floating-rate loans.
h. Where there is a (n) private placement, securities are sold directly to a small group of institutional investors. These securities cannot be resold to individual…
The lease on the building is for two years, so it is highly unlikely that this is a finance lease. It does not appear that the Large Mart is going to take ownership of the building. Thus, since this is not a finance lease, the journal entry would simply record the rent. There is no opening entry, just an expense.
621 Rent Expense
101 Cash at bank
The wages show as a journal entry at the end of the month. Because the employees were not paid, the wage expense shows as the creation of a liability. The liability account is later offset when the two are paid.
624 Wage Expense
204 Wages Payable
204 Wages Payable
101 Cash at Bank
Well the first to do is have a chat with the audit department about that $12,000 trip to China. It does not cost that much, unless he's buying some…
Rational people think on the brink of the margin. This means that a rational decision-maker takes action if and only if the marginal benefit of the action exceeds the marginal cost. People tend to always respond to incentives. Behavior often changes when costs or benefits change (Principles of Economics, 2006).
People make decisions based upon two things. hat they are going to get out of the decision and how much is the decision going to cost. People weigh decisions by comparing the marginal benefits against the marginal costs (Marginal Analysis, n.d.) And since people strive to get the most bangs for their buck, making less risky and thus less costly decisions will most often win out. The economic system as a whole relies heavily on the fact that people are going to take some risks and make some decisions.
"Marginal Analysis." n.d. 16 May 2009
"Marginal Analysis." n.d. 16 May 2009
"Principles of Decision Making." n.d. 16 May 2009
Accounting Information for Decision Making
Corporate Confirming on Water isk (Feb 2010) indicates that the Global Confirming Initiative (GI) G3 Guidelines' five water-related indications (total withdrawal volume by source, ponds considerably impacted by distributions, percentage and total amount of water recycled and used again, total water discharge by quality and destination, and identification water physiques and related habitats impacted by discharges) make the perfect beginning point for assessing and confirming water risks. Within this section, we'll briefly discuss the relevance of all these standards (Power, 2010).
Total water withdrawal by source
Confirming the entire amount of water withdrawn by source adds for knowledge of the general scale of possible influences and threats connected using the company's water use. The entire volume withdrawn offers an indication from the organization's proper size and significance as a user of water and offers to set up a baseline figure for other information relevant to…
GRI, (Global Reporting Initiative). (2006) Sustainability Reporting Guidelines. Version 3.0, Accessed on September 27, 2012 from: www.globalreporting.org/NR/rdonlyres/ED9E9B36-AB54-4DE1-BFF2-5F735235CA44/0/G3_GuidelinesENU.pdf
Power, G. Paddling Upstream - Approaches to Corporate Water Reporting. Business and the Environment, 21. 6 (Jun 2010): 1-3.
Further, Oracle also has templates and process definitions for the electronics components market as well. Lastly the financial modules with Oracle can also be used for local government reporting in addition to SOX compliance.
For the small business of $2M their needs are drastically different than the $100M distributor that has offices across multiple geographies. The $2M company for purposes of this example is a manufacturer of air conditioning spare parts and is heavily manufacturing based. Their customer base is primarily throughout the U.S. Their primary need is for an accounting system that can has Accounts eceivable, Accounts Payable, General Ledger, Billing, Inventory Management, distributed order management and sales order management, all core functions of an accounting system (Collins, 2006). In addition this small manufacturer also needs support for Debt Collection, electronic payment processing, online payroll, timesheets and purchase requisition as well. All of these features can be found in…
Susan B. Anders. (2006). Website of the Month: Accountant.intuit.com. The CPA Journal, 76(11), 70-71.
Phillip G. Armour. (2005). Sarbanes-Oxley and software projects. Association for Computing Machinery. Communications of the ACM, 48(6), 15-17.
J Carlton Collins. (2006). Small Business Software Grows Up. Journal of Accountancy, 201(3), 50.
Ivancevich, S., Ivancevich, D., & Elikai, F. (2010). Accounting Software Selection and Satisfaction. The CPA Journal, 80(1), 66-72.
When there is an overrun in an electrician's contractor fees or some other issue that is not controlled by the project manger, the project could come in over budget and cause additional cost-control problems.
Poor estimating of an original wiring scheme for example could create delivery delays or a need to push a project's wiring portion into an unacceptable overtime scenario. Thus, any unforeseen delays push costs and the project out of control. This means that responsibility budgeting for the organization requires the project manger to be able to establish deadlines and insure that each project meets its deadlines under or near budget. When this occurs, each satisfied customer usually provides a plethora of positive word of mouth advertising for future projects. Late or over budget projects usually entail the company receiving some verbal or written complaint that stains the company's reputation in the business community.
In conclusion, this report…